BYD and Long Beach Transit terminate electric bus contract

27 March 2014

BYD Motors, Inc. has agreed to mutually terminate its contract with Long Beach Transportation Company (LBT) for the delivery of 10 electric buses. BYD said that the Federal Transit Administration (FTA) withdrew funding of the contract as a result of an error in BYD’s pre-bid disadvantaged business program certification in February 2013.

LBT announced that BYD won the competition for the contract on 24 March 2013. Based on the contract award, BYD then submitted a percentage goal for purchases from disadvantaged businesses in June 2013. The FTA concluded, however, that BYD should not have certified to compliance prior to submitting a goal, even though submitting a goal in the absence of a contract award would have been meaningless.

Regardless, both the FTA and the LBT attorneys agree that BYD is now eligible to participate in any future contract funded by the FTA as a result of its June 2013 program goal submission.

It is surprising that the FTA waited nine months to withdraw funding from this contract—after BYD spent millions of dollars—due to what can only fairly be described as a technical error that in no way casts doubt on our deep commitment to purchase from disadvantaged businesses.

In an effort to demonstrate our good will to both the people of Long Beach and the FTA, we have agreed to mutually terminate the Long Beach Transit contract so it can be re-bid without delay. We are confident that we will prevail in any competitive re-bid in the future for the same reason we prevailed last year: Our superior technology.

—Stella Li, CEO of BYD Motors, Inc.

The FTA-funded stress testing in its Altoona, Pennsylvania, facility, of the BYD electric bus—the same model to be delivered to Long Beach Transit—has resumed and should finish soon.

BYD presently has sold and deployed more than 1,000 operating electric buses in China and throughout Europe and Latin America. It has received an order for up to 25 buses from the Los Angeles County Metropolitan Transportation Authority and is in the process of converting the Antelope Valley Transit Authority (AVTA) fleet to all-electric buses as it has done in other places around the world. BYD will deliver the first two buses to the AVTA in April 2014.

Comments

Davemart, if you've never chased Federal grant money, you might not be used to this sort of thing. The originating agency doesn't necessarily act on a "defective" bid, but in this case Proterra, who has done tons of work for the USG, was the competitor, and probably smelled the opportunity to file a bid protest after finding out BYDs labor problems. BYD has since posted a DBE solicitation on their web site to meet compliance.

Also it's not unusual for the grant awardee (in this case LBT) to be unclear on their obligations. I have been in a similar spot myself (in my case clearly stating up front that we would NOT be compliant and requesting a waiver, which was "provisionally" approved by the grant awardee along with a selection letter. Many $k later the Contracting Authority said oops, can't do it.)

Fear not for BYD. They are represented in the US by former Special Counsel to the President Lanny Davis.

BYD busses are running in the US today. Apple had at least one at their Cupertino site; there may be more now. Hertz has been running one for at least a year. There is a trial going on in NYC. Several have been operated in Omaha, DC, Indianapolis, and other cities as part of their "tour". BYD has an engineering project going on with the University of Utah to adapt wireless charging.

I don't think I could be any clearer: IF YOU WANT TO BUY A BYD ELECTRIC BUS AND USE IT IN THE U.S., YOU CAN.

So, in fact, can Long Beach Transit. What LBT CANNOT do is use a Federal Grant from the FTA TIGGER program and expend funds in a way that is not compliant with the requirements of FTA grants for a proportion of funds to be spent in Disadvantaged Business Enterprises. It's written very clearly in their application form:

"If you are an FTA recipient, you must require in your DBE program that each transit vehicle manufacturer, as a condition of being authorized to bid or propose on FTA-assisted transit vehicle procurements, certify that it has complied with the U.S. DOT DBE requirements at 49 CFR Part 26. See 49 CFR § 26.49(a)."

"If you are a transit vehicle manufacturer, you must establish and submit for FTA’s approval an annual overall DBE goal. In setting your overall goal, you should be guided, to the extent applicable, by the principles underlying 49 CFR §26.45. See 49 CFR § 26.49(b)."

LBT did not insure compliance, and the FTA said "you cannot spend this money if you are not in compliance with the grant requirements". Really, if anyone is angry about this delay, they should primarily focus their pique on the folks at LBT. It was their job to insure BYD was squared away. Mind you, BYD's little labor violations didn't help.

Moreover, if you are outraged by BYD's lost opportunity, don't be: LBT is working with them to resubmit the bid (OC Register 27 March). BYD has the Disadvantaged Business Enterprise solicitation on their web page. Everything will be fine.

What's more curious about this little embarrassment was a sidebar to the drama. There have been inquiries by the House of Representatives into this program -- not because the busses were of China origin. On the contrary: sources have told House staffers that high-level lobbying was used to prod the FTA to take a closer look at the BYD award. That lobbying was on behalf of Proterra, the key competitor to BYD. The lobbying individual was making entreaties on behalf of Proterra and one of its major investors: Kleiner Perkins.

Whos is the individual reputed to have been? Why, a key member of KP's CleanTech team, one Albert Gore, Jr.

Harvey, I appreciate your point, truly, and from your perspective I can see why it could look that way. But KP's interest in Proterra isn't a "buy American" thing at all. BYD was already planning on assembling the busses in the US, with a fairly decent amount of American content, all things considered. They would have easily qualified under "buy American" provisions (you need to obey American labor laws, of course).

For that matter, the largest component of manufactured value in the Proterra system is imported from Japan (Toshiba). I would suspect the majority value of the Proterra BE35 system offering does not qualify as "American made", but the complete system does.

KP backs a number of solar ventures (like Clean Power Finance) that are wholly dependent on Chinese content. They don't give a rat's a$$ where the content of BYD's product originated. They just wanted their guy to win. (BTW: do you realize that Republican Rep. Darrell Issa was a strong supporter of LBT's choice of BYD?)

Public money comes with a bundle of constraints. It should: the money is subject to legislative rules. But even then the US is probably the largest buyer of imported goods with public expenditures amongst the industrialized countries. This is even true of the DoD, where either non-US mfg or licensing of non-US components and systems is common: small caliber Naval guns from Italy (OtoMelara), USCG helicopters from France (EASA), squad and medium machine guns from Belgium (Fabrique Nationale), and ammunition from Serbia (Prvi Partisan). There are even parts on the F35 from China.

When you look at private money, the use of imported products is even more extensive. Since we're talking about busses, I challenge you to find a single Motor Coach operator in the US who buys an American bus. You'll be at this search task for quite awhile, so take my word for it.

I know you're hard over that the US is just plain mean to furriners, but we love their stuff. LBT WILL have their BYD busses after they clean up their paperwork (assuming Al doesn't pull another fast one and force Long Beach to buy a mostly Japanese bus!).